Advivo Business Advisors and Accountants share their insights on planning your business transition to ensure a smooth and successful process.
Determine your Goals and Motivations
Whether you are growing, exiting or stepping back from your business you will need an effective business transition plan. The most important step in business transition planning is determining your goals when it comes to your business transition and what you plan to accomplish through this business transition. This may seem straightforward at first but understanding your goals and motivations will help determine why you want to sell your business and what this actually means.
Another important question to answer in the early stages of business transition is to determine what is not important to you in the business transition and what is important to you. This is a very important question to answer as it allows further insight into your plan and allows your business transition to not only in achieving your goals, but also help to understand the underlying motivations for your business sale.
Identify Who is a Good Fit to Purchase your Business
It is important to identify the type of buyer that best suits your business transition goals. There are many types of buyers that can provide different options as part of business transition planning. Employees, financial buyers, competitors and management are all potential buyers who could help you achieve your goals. It is very important to start business transition planning far in advance as a short time frame will limit your options for finding the ideal buyer for your business.
Determine the Optimal Time for Sale
It is extremely important to identify market indicators and trends in valuation in business transition planning. Identifying these trends and indicators will help you determine the optimal time for selling your business. If the trends show a negative outlook, it may be wise to accelerate or extend the transition of your business to capitalise on the optimal return. Identifying trends in the market may help your business achieve a much higher purchase price than selling immediately in a down turning market.
Strategise the Implementation of your Plan
Determining how to put your insights into action is extremely important in business transition planning. Hiring a team of advisors will help you identify any risks and maximise your potential value and returns. Lawyers, accountants, tax professionals and investment bankers can help advise your business transition in the most successful way. This team of advisors can help with any legal or tax-related issues, ensuring your business transition goes as smooth as possible. The team at Advivo Business Advisors and Accountants can help you fulfil the need for all these advisors.
Some other tips in ensuring successful business transition planning include starting your planning well in advance, allowing your business to find the right inclusions and ensuring the maximum return from the sale. A well planned out transition plan will allow for a smooth transition if any unforeseen circumstances occur, such as sudden life changes. A major illness, for instance, can mean you need to exit your business sooner than expected and planning in advance will allow for breathing room and ensure you still achieve maximum value from your exit. It is also important to have an understanding of any implications that come with deal structures and potential taxes and to calculate how much money you will need from the sale of your business.
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